Danone is selling its dairy division in Russia. Originally, the FMCG giant did not want to let go of Russia, but now it is (partially) pulling out anyway. Only the baby food business will be retained by Danone.
Better for continuity
Danone sells its Russian activities, or at least about 90% of it. Both the dairy and plant-based branches are transferred, only the infant nutrition division remains with Danone. The withdrawal could cost the yoghurt producer around one billion euros.
When Russia invaded Ukraine, Danone was one of those Western companies that felt it was their duty to continue feeding the Russian population. However, as business in the country becomes increasingly difficult and growth is faltering, CEO Antoine de Saint-Affrique changes course. Suddenly, a transfer is said to be the best option “to ensure the long-term continuity of the local business”, for employees, consumers and even partners.
In the first nine months of this year, some 5% of net sales came from Russia, but that share is falling and margins are thin. Moreover, there is continuing pressure from the West to cut all ties with Moscow. The news was therefore well received on the stock market, even if Danone remains guarded: the French manufacturer could possibly keep a minority stake in the business